Sanctions Against Iran: A Promising Struggle
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Recent reports also indicate that as larger, more established banks have scaled down their business with Iran, smaller, second-tier entities have stepped in. As major European financial institutions cut off ties to Iran, for example, banks in Pakistan and elsewhere are taking on this business. The difficulty for the United States is that these types of banks are less likely to respond to the general warnings issued by the UN or FATF and pay little attention to veiled U.S. threats. They tend to be less concerned about reputational risk than the major players, and the possibility of being cut off from the U.S. market is largely irrelevant from their perspective, as they do not do business in the United States. A similar trend may be taking place with other types of companies. Although many major European companies may be reluctant to sign new contracts with Iran in this current environment, Norsk Hydro ASA, a Norwegian firm, won a $100 million deal to develop an oil field in Iran in September 2006. A company spokesperson noted that although the United States is “not happy that we’re there,” the deal was highly profitable.
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Some observers believe that the political and economic problems are starting to have an effect on the Iranian regime’s thinking about the nuclear issue. Eizenstat noted, “I think it’s one of the reasons there’s at least the beginning of a debate in Iran about whether it’s wise to go forward with the nuclear program.” Iran expert Kenneth Katzman argued that the political developments indicate that the U.S. strategy is working, adding, “[W]e do see signs of a strategic reassessment in Iran.” In fact, the recently released NIE gives cause for optimism that Iran might actually modify its behavior on its entire nuclear program in the face of the right mix of carrots and sticks. The NIE noted that Iran’s nuclear-related decisions are guided by a “cost-benefit approach rather than a rush to a weapon irrespective of the political, economic and military costs.” According to the NIE, Iran’s decision to halt its covert nuclear weapons program in 2003 was in response to “increasing international scrutiny,” suggesting that “Iran may be more vulnerable to influence on the issue that we judged previously.”